Premiums on newly assembled cars are reaching out
to its new altitudes following the late delivery of cars by the
assemblers with new models thronging the market. The dealers remarked
that the late delivery has been infusing a renewed buying passion
among customers. Market players and even assemblers think that the
menace of premium on new models is likely to dominate the market in
the current year with the same tendency since the demand and supply
gap is still widening. Premium on Toyota Corolla is being charged at
Rs 150,000- 160,000 as compared to Rs125,000 two weeks back, while
premium on new automatic Daihatsu Cuore is being demanded at Rs
75,000.

Indus Motors, with the exception of new automatic
Cuore, has already suspended the booking of new Corolla model. Buyers
who had booked Corolla prior to suspension of booking, would have to
wait for at least five to six months to get a new car. In some cases,
the delivery period goes beyond six months.

Premium on new Honda Civic increased by Rs†
25,000, as it now ranges between Rs120,000-150,000 as compared to
Rs120,000 two weeks backs.

The premium on Suzuki Cultus is being charged at Rs
125,000 but in some models and colours, dealers are demanding
Rs100,000. Two weeks back, premium on Cultus ranged between
Rs150,000-160,000. Customers can get the delivery of Cultus by
September if they book it today.

Premium on Mehran 800cc ranges between
Rs30,000-35,000, while on Alto 1000cc, the present rate is
Rs50,000-60,000 depending on the model and colour.

Dealers said that the rate of premium on Honda City
is tagged at Rs 150,000 as compared to Rs 125,000 two weeks back.

They said that the issues of high premiums and late
delivery of cars had not been addressed by the assemblers despite
achieving over 70 per cent car production every month.

On the other hand, assemblers do not agree that the
market situation relating to high premiums and late delivery is so
pathetic, as portrayed by the used car importers' body.

The demand and supply gap is closing and these
issues will not stand any more after six months, they said, adding:
most of the newly assembled cars are now being handed over to the
customers in two to three months except for a few models which were
being delivered in five to six months.

The dealers said that premium on new cars still
exists but it was in the narrow range of Rs10,000-40,000. They said it
were not the investors who had already devastated the car market but
currently a lot of "common people" were making huge bookings
of new cars. Even housewives had also become active in grabbing a new
Sedan to make timely profit.

The situation in car market, however, is now
stabilizing since the local car industry has increased its production
capacity to bring the demand and supply gap closer. But, a senior
executive in a leading car industry said that the car assemblers are
now in a fix whether to increase the prices in view of rising steel
prices or continue to absorb it.

He said that the price of steel sheets, being
imported from Germany, Japan, Taiwan and Korea, had risen by 27-30 per
cent after the worldwide steel crisis.

Even the local vendors were exerting pressure on
assemblers to raise the component prices, but carmakers had been
dilly-dallying in this regard. He said the car industry had been
absorbing the recent rise in cost of production despite government's
demand for price cut. He was of the view that the year 2004-2005 had
seen a demand and supply gap of only 15,000 cars which was expected to
shrink by June 2005-2006. Analysts said that the chances of opening
used car imports seem remote.

However, they think that the industry would
continue to remain over-protected as import duties on new cars had
been slashed in such a way that imported cars would remain costlier as
compared to locally assembled cars, leaving little room for the buyers
to ponder twice before its purchase.

CNG FEATURING IN AUTOMOBILES

The carmakers have geared their efforts up to meet
the rising pressure of orders for CNG-fitted vehicles following the
rising petrol prices as the demand of CNG cars has risen by 45 per
cent during one year.

Data made available to PAGE shows that around
14,000 CNG-fitted vehicles are being added up every month as compared
to 8,000 units last year. The petrol still costs 50-60 per cent more
than the gas despite slight increase in CNG prices.

"The share of CNG vehicle sales now ranges
between 60 and 70 per cent in the total sales of vehicles as compared
to 40 and 50 per cent a year back," General Manager Marketing,
Pak Suzuki Motor Company, said.

The demand of CNG vehicles is progressively
increasing, and the company is under pressure due to rising booking of
CNG-fitted vehicles. Rising petrol prices in the last one and a half
years can be one of the main reasons for a demand spurt of gas
vehicles. "I think that a CNG-fitted vehicle still has 60 per
cent less fuel cost than the car running on petrol." When the
petrol was Rs30-31 per litre, consumers were quite reluctant in
converting their vehicles to CNG but the actual boom in CNG conversion
erupted when petrol prices touched new peaks of Rs38 per litre. In
case petrol becomes more costlier in future, the sales of CNG-fitted
vehicles will accelerate further, Ashfaq said.

Pak Suzuki offers CNG fitted vehicles in all its
models. The company sold a total of 42,400 units in July-February
2004-2005 as against 35,600 units in the same period of 2003-2004, up
by 19 per cent. The company sold 18,800 units of Mehran 800cc model,
showing a nine per cent growth as compared to 17,200 units. Alto
1000cc sales rose by 71 per cent from 4,200 units to 7,200 units in
eight months of fiscal year 2004-2005.

On January 1, 2004, petrol was available at
Rs33.78, while diesel and kerosene were selling at Rs22.78 and Rs22.38
per litre. In effect, the price of petrol has risen by Rs11.75 in the
last 15 months. In the same period, diesel has become costlier by
Rs6.28 per litre.

Petrol prices are feared to go up further in coming
fortnights in case international crude oil prices continue to show
rising trend. "Time is not far when consumers will be paying Rs50
a litre for petrol. I have been receiving 50 per cent booking for CNG
fitted Hyundai Santro as compared to 20 per cent out of the total car
sales," Director Marketing, Dewan Farooque Motors Limited (DFML),
Farooq Mustafa, said.

"If petrol continues to become costlier, sale
of CNG cars is expected to hover between 70-80 per cent in coming
months as compared to current 50 per cent," he added.

He said that awareness of using CNG can be one of
the main reasons behind the flourishing demand of gas vehicles in the
country, besides the ever-rising petrol prices. A total of 3,900 units
of Santro were sold during July-February 2004-2005 as compared to
3,800 units in the same period of 2003-2004. Total sales of Santro in
2003-2004 stood at 6,922 units.

President CNG Station Owners Association of
Pakistan, Malik Khuda Bux said that currently a total of 600,000 cars,
fitted with CNG, are running on the roads as against 450,000 vehicles
a year back.

The demand of CNG is increasing which is evident
from the rising number of gas vehicles ranging between 12,000 and
14,000 units as compared to 8,000 a year back, he said.

Currently, there are 648 gas pumps operating all
over the country, as against 450 a year back and 400 some two years
back. Some 59 applications are under process for setting up new gas
stations, while the government has also issued licences for 300 new
stations.

Local automobile sector was one of the top most
growing sectors in the country during the current year.

It has a weight of 3.96 per cent in large scale
manufacturing (LSM) and hence helps overall GDP growth. Indus Motors
offers CNG fitted vehicles in only Daihatsu Cuore models, while Honda
Atlas does not offer CNG fitted cars in its two models - City and
Civic. Price conscious people, who own Toyota Corolla and Honda cars,
are gradually shifting their vehicles to cheaper fuel mode.